World Bank2014-03-142014-03-142014-01https://hdl.handle.net/10986/17279Albania's rapid growth in the decade up to the 2008 global financial crisis propelled it to middle-income status and helped to reduce poverty. The global financial crisis in 2008 slammed the brakes on Albania's largely domestic-demand-driven growth. The government has accumulated sizable arrears in payments for public works and value-added tax (VAT) refunds. In a baseline scenario of no policy reforms, Albania's public debt-to-gross domestic product (GDP) ratio is projected to reach 73.5 percent in 2015 and stay above 72 percent over the medium term. Empirical evidence confirms that high public debt depresses economic activity and significantly increases the probability of default. This report examines closely the opportunities for fiscal consolidation on both the revenue and expenditure sides. Combined effect of structural reforms will reduce Albania's public debt to GDP ratio significantly over the medium term. It can in parallel rebalance its capital spending, particularly in transport, toward maintenance to support growth. Albania needs to strengthen its institutions to reinforce financial discipline and strengthen fiscal policy. Institutional reforms are particularly needed with regard to public financial management (PFM) and introducing a fiscal rule to anchor policy over the medium term.en-USCC BY 3.0 IGOACCOUNTINGAMORTIZATIONARREARSARTICLEASSET MANAGEMENTBANK BORROWINGBANK LOANBANK LOANSBANKING SECTORBANKING SYSTEMBASELINE PROJECTIONSBASELINE SCENARIOBONDSBORROWERBORROWING COSTSBUDGET PLANBUDGET PLANNINGBUDGETINGCAPITAL EXPENDITURECAPITAL INVESTMENTCAPITAL INVESTMENTSCAPITAL SPENDINGCAPITALIZATIONCASH FLOWCASH MANAGEMENTCENTRAL BANKCENTRAL GOVERNMENTCENTRAL GOVERNMENT DEBTCIVIL SERVICECIVIL SERVICE LAWCOLLATERALCOMMERCIAL BANKSCOMMERCIAL LOANSCOMMODITY PRICESCONSUMER GOODSCONTINGENT LIABILITIESCONTINGENT LIABILITYCORPORATE INCOME TAXCORPORATE TAX RATESCREDIT GROWTHCREDIT LINESCREDIT RATINGCURRENCYCURRENCY DEPRECIATIONCURRENT ACCOUNT DEFICITDEBT BURDENDEBT CRISESDEBT CRISISDEBT DEFAULTSDEBT DYNAMICSDEBT LEVELDEBT LEVELSDEBT MANAGEMENTDEBT RATIODEBT RATIOSDEBT REDUCTIONDEBT STOCKDEBT SUSTAINABILITYDEBTSDEFICITSDEPOSITSDOMESTIC DEBTDOMESTIC MARKETDURABLEECONOMIC DEVELOPMENTECONOMIC RECOVERYEMERGING MARKETEMERGING MARKETSENTERPRISE PERFORMANCEEQUIPMENTEQUIPMENTSEUROBONDEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURESEXPORT COMPETITIVENESSEXPORT GROWTHEXPORT SHAREEXPORTEREXTERNAL BORROWINGEXTERNAL DEBTFIDUCIARY ASSESSMENTFINANCE MINISTRYFINANCIAL ACCOUNTABILITYFINANCIAL ASSETSFINANCIAL CONTROLFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL MANAGEMENTFINANCIAL RISKSFINANCIAL STABILITYFINANCIAL SYSTEMFINANCING REQUIREMENTSFISCAL BALANCEFISCAL CONSOLIDATIONFISCAL DATAFISCAL DEFICITFISCAL DEFICITSFISCAL IMPACTFISCAL POLICYFISCAL SUSTAINABILITYFIXED INTERESTFIXED INTEREST RATESFLOATING RATESFOREIGN CURRENCYFOREIGN CURRENCY DEBTFOREIGN DIRECT INVESTMENTFRAUDGOVERNMENT BUDGETGOVERNMENT FINANCEGOVERNMENT FINANCE STATISTICSGOVERNMENT GUARANTEESGOVERNMENT PAPERGOVERNMENT REVENUEGOVERNMENT SPENDINGGOVERNMENT SUPPORTGOVERNMENT SUPPORTSGROSS DOMESTIC PRODUCTGROWTH RATEHEALTH INSURANCEHEALTH MINISTRYHOLDINGHUMAN CAPITALIMPLICIT SUBSIDIESIMPORT COSTSINCOME TAXINCOME TAXESINFLATIONINFLATION RATEINSURANCEINTEREST COSTINTEREST COSTSINTEREST EXPENDITUREINTEREST EXPENDITURESINTEREST PAYMENTSINTEREST RATE DIFFERENTIALINTEREST RATE RISKINTEREST RATE RISKSINTERNATIONAL DEVELOPMENTINVESTINGINVESTMENT BANKINVESTMENT CLIMATELAND VALUELIQUIDITYLIVING STANDARDSLOAN GUARANTEESLOAN QUALITYLOCAL CURRENCYLOCAL GOVERNMENTMACROECONOMIC CRISISMARKET CONDITIONSMARKET CONFIDENCEMARKET STRUCTUREMATURITYMINISTRY OF FINANCEMONETARY FUNDNATIONAL INCOMENATIONAL STRATEGYNET PRESENT VALUENON-PERFORMING LOANSNONPERFORMING LOANSOPPORTUNITIES FOR CORRUPTIONORGANIC BUDGET LAWOUTPUT LOSSESPENSIONPENSION REFORMPENSION REFORMSPENSION RIGHTSPENSION SYSTEMPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPORTFOLIOPOVERTY REDUCTIONPRIVATE CREDITORSPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE SECTORPROBABILITY OF DEFAULTPRODUCTIVE INVESTMENTSPROPERTY RIGHTSPUBLIC BORROWINGPUBLIC DEBTPUBLIC EXPENDITUREPUBLIC FINANCEPUBLIC FINANCESPUBLIC FINANCIAL MANAGEMENTPUBLIC INVESTMENTPUBLIC SECTOR DEBTPUBLIC SECTOR DEFICITPUBLIC SPENDINGPUBLIC WORKSRE-CAPITALIZATIONREAL GROWTHREAL INTERESTREAL INTEREST RATEREGULATORY AUTHORITYREMITTANCESRETURNSRISK MANAGEMENTRISK SHARINGROAD NETWORKRULE OF LAWSANITATIONSHORT-TERM DEBTSOCIAL INSURANCESOVEREIGN DEBTSTRUCTURAL REFORMSSUSTAINABLE FISCAL POLICYT-BILLSTAX ADMINISTRATIONTAX BASETAX COLLECTIONTAX EVASIONTAX POLICYTAX RATETAX REVENUESTELECOMMUNICATIONSTOTAL TAX REVENUETREASURYTREASURY SYSTEMVARIABLE INTEREST RATESZERO COUPON10.1596/17279